India’s reform-led growth momentum continues to bolster industry sentiment, with business confidence touching a five-quarter high despite global headwinds from geopolitical tensions, trade disruptions and a slowing world economy.

According to the latest business outlook survey by the Confederation of Indian Industry (CII), the Business Confidence Index rose for the third consecutive quarter to 66.5 in Q3 FY26—the highest level in five quarters. The improvement reflects sustained optimism around demand, profitability and investment conditions.

As per the survey, resilient domestic demand continues to underpin sentiment despite global uncertainties stemming from geopolitical tensions, trade disruptions and a slowing world economy. Around two-thirds of firms reported higher demand in Q2 FY26, while 72% expect demand to rise further in Q3 FY26, supported by GST rate cuts and festive consumption. Investment and hiring intentions also remain strong.

“The steady rise in business confidence shows industry’s ability to navigate external headwinds, anchored by resilient domestic demand and a robust reform agenda,” said Chandrajit Banerjee, Director General, CII. Industry anticipates the growth momentum to strengthen further in the months ahead, he added.

CII said India’s position as the world’s fastest-growing major economy has been reinforced by sustained reforms and policy stability, and industry now expects the next wave of structural reforms in the Union Budget 2026–27 to help sustain this momentum.

As part of its pre-Budget recommendations, CII has called for continued emphasis on capital expenditure, including the launch of a revitalised National Infrastructure Pipeline (NIP) 2.0 with an outlay of ₹150 lakh crore. The industry body said the focus should be on shovel-ready, revenue-generating projects and faster dispute-resolution mechanisms to crowd in private investment.

CII also proposed the creation of an India Development and Strategic Fund (IDSF), a sovereign-anchored platform to mobilise domestic and foreign capital. The fund could have a developmental arm to support priorities such as MSMEs, energy transition and human capital, and a strategic arm to facilitate overseas acquisitions and partnerships critical to India’s long-term economic and security interests.

To ease compliance and improve ease of doing business, CII recommended setting up a ₹1,000 crore digitisation fund to accelerate regulatory digitisation, including initiatives such as Unified Enterprise Identity, Entity Locker, API-based compliance and a National Compliance Grid.

Highlighting the importance of innovation-led growth, CII suggested establishing 10 Centres of Advanced Learning and Research (CALRs), each with a budget of ₹1,000 crore, focused on frontier areas such as artificial intelligence, quantum technologies, clean energy and biotechnology, through a public–private co-funding model. It also proposed setting up an India Talent Agency in major global hubs to attract top global talent and engage the Indian diaspora.

On trade and exports, CII recommended a simplified three-tier tariff structure with lower duties on inputs and moderate tariffs on intermediates to improve competitiveness and integration into global value chains.

For the financial sector, CII called for strengthening development financial institutions, encouraging well-capitalised new banks, allowing selective NBFC-to-bank transitions, and consolidating weaker institutions. It also suggested setting up an expert committee, on the lines of the Narasimham Committees, to review banking structures, ownership and governance norms.

CII further advocated accelerating asset tokenisation across real estate, infrastructure and financial assets through a National Asset Tokenisation Framework, leveraging GIFT City and regulatory sandboxes to attract global capital and unlock liquidity.

“As India advances into the next decade, sustained reform and a strong industry–government partnership will be critical to maintaining world-leading growth while ensuring that opportunity reaches every household,” Banerjee said.